Prequalifying Clients

There is an old saying that if you don’t know where you’re going, any road will take you there. Similarly, in the remodeling industry, if you don’t know what your business focus is, any client will do. In today’s marketplace, where finding remodeling jobs can be a struggle, accepting clients you avoided in the past may be a necessary evil. However, a group of remodeling contractors in Cincinnati stresses the importance of staying true to your business and yourself.

Qualified Remodeler had the opportunity to talk to Paul Bauscher, president of Bauscher Construction and a member of the Ohio Valley NARI chapter board of directors; Andrew Glasgow, CR, vice president of H. Glasgow Construction and president of the Ohio Valley NARI chapter; Neal Hendy, MCR, GCP, president of Neal’s Design-Remodel; and Steve Zimmer, CR, president of Remodel Cincinnati, to learn how they know when to walk away from a potential job.

The Phone Call

Zimmer: We have a general approach when clients call in to qualify them. Like everyone else, I don’t want to drive out and look at something I have absolutely no chance of turning into a project. I start probing to find out whether there is something they’re willing to do within their budget that I can turn into a job. There is a certain script, but I don’t stick to it very well. I know the information I want to get, and everybody you talk to is going to be a little different. Ultimately, I think we need to adjust for each individual call.

I just had a guy call whom I determined pretty quickly was not somebody I wanted to fool with. Part of it was the part of town he was coming from and part was the list of stuff he had: fix a railing and garage door, install new kitchen cabinets. When I probed, I found out he’s going through a divorce and has to be in court next week with an estimate to put the house in sellable condition so he and his wife can settle on it. He has dragged his feet and now he wants somebody to race in and give him an estimate he can take to court. He really isn’t interested in getting the job done. Although everybody offers free estimates, it would’ve taken me all day to work out the numbers and then write something he could take to court. I told him the reality of it is it probably won’t turn into a job for me so I can’t work for him for an entire day for nothing. In the end, he said he understood.

Hendy: I commend you on that, Steve, because I think all of us try to ask the open-ended questions to make sure we know as best we can—without offending a client—what he or she is looking for. Essentially, we’re saying, “Help me qualify you as you’re qualifying me.” You got to the crux of the matter that probably a lot of people with less experience wouldn’t have gotten.

Zimmer: Even though I don’t have a lot of money coming in the door, I’ve gotten really tired of working for nothing. I’ve come to the point where I feel I’m allowed to tell someone that to do a good estimate with a valid number I’m going to invest this many hours so I want to be sure he is a viable client. Some people don’t take that well; others say they completely understand. For those who don’t take it well, I figure those are the ones I probably wasn’t going to get along with well anyway.

The Budget Numbers

Bauscher: The conversation has to be crafted to get you to that budget question eventually. I have conversations with people they think have nothing to do with their project. I learn things like what kind of car they drive; I don’t just ask, but there are ways to find out in the conversation. You must craft the conversation in a way that helps them understand why you need their budget to help them. Remember, their defenses are always up. They’re thinking, “If I tell you I can spend $50,000, you’re going to make the bid $49,000.” What they need to understand is I really can’t help them until I know what they want to spend and what they want to accomplish.

Zimmer: Maybe it’s because I’ve gotten cantankerous but I have a rule I operate by: I will not cut my price on large projects. I’ve had it happen where I cut the price on a large project and we got tied up for a couple months doing a nonprofit project and the sky opened up and there were all sorts of things I could’ve been doing that were profitable. If we need the work, I’ll take small projects and do deals on them to get the guys working for a week. If things don’t turn around in a week, I’ll pick up another one-week project. It sounds funny but the worse the economy gets, the more I stick to my guns about getting the margins we need to be profitable.

When to Say No

Glasgow: A lot of times I think it takes a big person to say, “I’m not the right person for the job.” The prospect wants you to do the work, but you know you’ll have problems with him.

Zimmer: Years ago, as a homeowner led me to a back room of his house, he stopped me four times to say, “Look what this [expletive] did.” By the time we got to the room, I said, “You really don’t want me to do this.” He asked why. I said, “I don’t want to be the next [expletive].” This was a simple one; others are more subtle. In fact, we’re doing a job now for a client we’ve worked with for 20 years, and she is the pickiest woman I’ve ever done work for. We’ve learned how to deal with her; I always have extra money factored in. If I just met her today, I probably would avoid her.

Hendy: When we go to somebody’s home, our antenna is up at a very high level. If the homeowner has a hoarding issue, it will make the project more difficult so you have to put a fudge factor in there to cover that. You may also identify some missing character traits. Does the homeowner respect his kids, his wife? With a lot of my high-end clients, my guys will come to me after the job and say, “We’re never going back there.” You have to look for signals as best you can ahead of time because some people will wear your staff out.
If one of those problem clients were to call me right now and say, “I want to do a project,” I don’t know that I would automatically close the door, but I would have to get in front of people in this company and ask whether we’re going to do the project. Historically, I could decide without the others knowing the problem customer had called. But in this environment, I have to go to them and ask whether anybody has had a change of heart.

Glasgow: Different crews are good with different personalities so pairing those crews with the personalities is crucial. We had a job about three years ago that by the end of it I had crew A, B and C through the house. However, the homeowner was so happy with the job that we’ve done four or five jobs for her since. But, like Steve said, you have to factor in for what you know is going to happen.

Zimmer: Sometimes you have to flat refuse. Some people are very picky but can eventually be pleased. Some people you’re never going to make happy; they’re just angry at the world.

Qualifying clients is not so much about following a script and planning things out business-wise. It’s a one-on-one interaction and those who make the first contact with these people have to figure out what crews go there, whether we really want to do business with them, if we think they can be pleased. A couple years ago, I had a referral from a valuable client so I didn’t want to refuse her, but I learned she was a hoarder when I got to the house. She needed a bath remodeled and it was a viable job. I took pictures, as I always do, and showed them to the guy who would get the job. I told him if I sell the job and he takes it I would put an extra $500 in as a bonus for working in that environment. We sold the job, he did it and he loved the $500. It was a case of reading her; she was a nice person.

Bauscher: You’re really making judgments about people. It’s sort of like a relationship; it takes a few dates before you know whether it’s good or bad. Unfortunately with clients you sign a contract so now you’re married. Sometimes I feel like I pump a lot of gas in my car but you have to see them. You learn so much about somebody in their house. You can watch for visual cues about how they do things. You can talk about their hobbies. You find out where their values are and, ultimately, whether they’re willing to pay a professional.

It’s tough in this economy because everybody has been forced to take projects they would’ve loved to walk away from. We recently walked away from a very nice pool-house project because we had done other work for this client. One of my project managers said, “If you sell that pool house, I’ll sit at home and watch ‘Oprah’ instead of working there.”

He’s a good judge of character, a patient guy and good at what he does so we walked away. That’s luck because we had previous experience. It’s really about the intangible conversation. You can’t get lost and forget the science. You must know what you’re looking for. If you know someone is going to beat you up, you’re not serving your business or your personal life by taking that client on.

Remodeling in Cincinnati

In the report “A New Decade of Growth for Remodeling,” released earlier this year by the Joint Center for Housing Studies of Cambridge, Mass.-based Harvard University, Cincinnati was listed as one of the top markets for remodeling activity. The remodelers who took part in this article stress they aren’t walking away from jobs because they have more business than they can handle.

“I think we can collectively agree that Cincinnati is not the No. 1 marketplace for remodeling in the country,” says Neal Hendy, MCR, GCP, president of Neal’s Design-Remodel. “Does the city have matrices that look good? Yes. But people are not ready to take on new obligations and everybody is saying they’re not going to spend. There’s a lot of pent-up demand.”

“Andrew [Glasgow, CR, vice president of H. Glasgow Construction] and I are on the board of the Ohio Valley NARI chapter so we talk to members monthly,” explains Paul Bauscher, president of Bauscher Construction. “Business seems a bit spotty. I’ve talked to people who say they can’t sell a job to save their lives. In the past, my business was strongly driven by architectural contacts, but I don’t know what architects are doing to eat right now. If it weren’t for referrals and smaller projects, like baths and basements, I’d be in the soup line. We’re not cavalier about walking away from projects. However, if I’m doing it for free, I’ll do it at my own house.”

“The last couple years have been really rough,” adds Steve Zimmer, CR, president of Remodel Cincinnati. “I have taken on some jobs that ordinarily I wouldn’t have. We’ve done a lot of small repairs that we used to say no to. We hope these small jobs will bring others behind them.”

“I think there are two types of companies locally: dirt-value and honest-value,” Glasgow explains. “When the recession hit, I think the dirt-value companies were very strong. People are going to start finding out about the dirt-value companies—what their standards and product longevity are. In my opinion, honest-value companies now are going to start shining through.”